Netflix surprises Wall Street

Streaming video company Netflix recently posted its financial results for Q4 2012. Netflix had a very strong quarter adding nearly four million new customers in the United States and abroad. The company's results were better than expected on Wall Street, sending stock prices soaring (the stock is currently up over 37 percent to $142).

One reason analysts and Wall Street investors were so surprised by Netflix's quarterly results was because three months ago the company had issued a letter to shareholders warning that it expected to see a loss for the fourth quarter.

Reuters believes that Netflix underestimated the impact that incredibly robust sales of tablets, smartphones, and smart TVs would have over the holiday shopping season. The huge numbers of new devices meant a significant number of new signups for the streaming video service.

Netflix reported $8 million in net income for Q4 2012 or $.13 per share. Revenue rose 8% to a total of $945 million compared to the same quarter of the previous year.

The company also says that it expects to add 1.7 million new members during the first quarter of 2013. However, Netflix is predicting "relatively flat" net income for the quarter due to declining DVD profits and increased operating costs globally.
Analysts on Wall Street had expected Netflix report quarterly loss of $.13 per share. Full-year income for Netflix in 2012 was $17 million, a 92% decline from the previous year when Netflix reported $3.6 billion in full-year income. The massive decline is blamed on increasing costs (mainly the costs of purchasing movie/TV show streaming rights from studios).

Netflix recently announced its new AirPlay rival, DIALservice, in cooperation with YouTube.

Sources: Reuters, Netflix [PDF]

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